Deutsche Bank pilots "game-changing" payments solution with IATA

Deutsche Bank is running a pilot project with the International Air Transport Association (IATA), the airline trade association, to test a disruptive new payment model.

Through the pilot, Deutsche Bank will look to reduce costs for processing payments between airline clients and airlines. Deutsche Bank will collect customer payments directly from consumer accounts in line with the newly revised EU Payments Services Directive, PSD2. Currently, payments are mainly processed via credit and debit transactions.

The new payments scheme aims to offer improved speed, security and transparency. Two-factor authentication will offer enhanced fraud protection for airlines and, with direct payments being processed and received in near-real time, airlines, will get their money faster.

This will generate significant working capital and liquidity benefits, Deutsche Bank says.

Cutting the $8 billion bill

Deutsche Bank estimates that combined, these benefits stand to reduce the estimated $8 billion that IATA members currently incur from payment processing costs and fraudulent activity. For travellers this will result in more choice, a smoother and less complex payments process and ultimately more convenience when paying for airline travel.

Javier Orejas, Head of Banking EMEA and the Americas at IATA, comments: “The direct payment model promises significant cost savings and efficiency gains for our members. With airlines paying huge amounts for transaction fees and compliance – in addition to losses sustained due to fraud – this is a highly valuable innovation for the industry.”